Amgen Takes $780M Charge For Marketing Probes
October 26th, 2011 // 12:27 pm @ jmpickett
In an effort to rid itself of several nagging civil and criminal investigations, as well as several whistleblower lawsuits, Amgen has reached an agreement to settle charges that certain sales and marketing pratices were illegal. As part of the move, the biotech is taking a $780 million in its third quarter, although talks are still under way, according to its latest quarterly financial report.
“If the ongoing settlement discussions are successfully concluded, Amgen expects that the proposed settlement will resolve the federal investigations, the related state Medicaid claims and the claims in US ex rel. Westmoreland v. Amgen, et al. and the other nine qui tam actions previously described in the company’s periodic filings with the US Securities & Exchange Commission,†Amgen states.
The Westmoreland lawsuit has been particularly embarassing for Amgen. At issue are allegations that Amgen provided free ‘overfills’ of its Aranesp anemia medication and encouraged doctors to bill Medicare and Medicaid for the extra amounts. The lawsuit, which was filed five years ago by Kassie Westmoreland, a former Amgen employee, also charges the biotech offered kickbacks to doctors in the form of fictitious consulting arrangements and weekend getaways in order to steal market share from Johnson & Johnson, which sells the rival Procrit treatment.
Earlier this year, five former Amgen execs ‘took the Fifth’ in depositions. And Amgen lost an important round when a federal appeals court reinstated the lawsuit, which had been previously dismissed. Two months ago, the biotech asked the US Supreme Court to review the decision (see here).
In a separate, but related incident, Amgen recently lost a battle with the US Attorney in Brooklyn over a deal to coordinate employee interviews as part of its investigations about allegations that HIPPA rules were violated and docs were offered kickbacks to boost sales of various meds and steal market share from J&J. Amgen claimed there was a breach and sought to nullify the arrangement, but a judge ruled the feds could interview employees .
The charge reduced third-quarter net income by $705 million, although the biotech beat Wall Street earnings estimates and raised its full year outlook. Overall, revenue rose 3 percent. The upbeat quarterly report comes just one week after Amgen disclosed plans to rework its R&D operations and eliminate 380 jobs. At the same time, the biotech hired a key marketing exec from Bristol-Myers Squibb .
source: Pharmalot
